The comments came as the group picked up a key advice practice from MLC in the fallout of the wealth giant’s acquisition by IOOF in August. Ascent Wealth, a previously Godfrey Pembroke-aligned firm headed by ex-FPA director Mark O’Toole, announced it would move to the Countplus-owned Count Financial following the acquisition.
Speaking to ifa prior to the announcement, Countplus chief executive Matthew Rowe raised questions about the viability of the institutional model in the advice industry going forward, and said practitioners would be looking for licensees that were increasing, rather than reducing their investment in advice.
“Vertically integrated businesses [are] still legal but whether it’s the right thing to be doing or not, that’s another topic of conversation,” Mr Rowe said.
“We are about trying to run a clean model, it’s purely user-pays and a focus on fee for service.”
Mr Rowe said while large aligned players still remained in the sector, time would tell whether the business model was ultimately sustainable.
“AMP and IOOF will be there, [but] whether they survive or what they look like, who knows,” he said.
“I think AMP is in a bit of trouble and my only comment about IOOF is it’s a big acquisition they’ve made and they’ve paid a lot of money for it, so they’re going to have to make it work.
“They’re going to have to find a lot of cost synergies and expenses to be stripped out of the business at a time where we’re actually investing heavily in the business around capabilities and what advisers will need to be sustainable.”
Announcing his decision to join Count on Wednesday, Mr O’Toole said the group had presented an offer that included plenty of support and resources to help his practice be more efficient.
“Count Financial is running a clean model which has clear separation between product and advice – which is how we believe the best client outcomes can be achieved,” Mr O’Toole said.
“They also have a strong balance sheet and have invested in robust compliance and technology systems to enable us to better deliver quality advice to clients.”
Count Financial noted it had recruited more than 50 new advisers since January. However, this came on the back of a significant reduction in numbers as the previously CBA-aligned group transitioned to CountPlus ownership, with its adviser numbers almost halving from 413 in December 2018 to 241 in November this year.
Reading their annual report, it seems that CountPlus separate ‘Financial Planning’ and ‘Financial Services’ revenue. The first generated $11.78m, while ‘Financial Services’ generated $12.52M (At $50+m, Accounting Revenue seems the biggest business unit by some measure).
I’m not clear on the difference, but I found this section on page 56 interesting:
“”Financial services revenue includes revenue generated from services performed by authorised representatives of Count Financial and Total Financial Solutions Australia Limited (TFS) (both Australian Financial Services Licence holders) and[b] product margin rebates that are paid by product providers to TFS and Count Financial.”[/b][b][/b] (Emphasis mine).
Why would an adviser join Count when the agreement restricts the advisers ability to exit the AFSL. Much better with a family owned AFSL like Lifespan or Synchron whoe roots do not come from a bank like MLC or count
The view doesn’t matter now. The baby has been thrown out with the bath water. When you look at the volume of remediation being done amongst the big groups, you can see that VI has it’s merits, being profit margins that can cover remediation and oversight that identifies the need for remediation, (Rightly or wrongly isn’t my point).
The point is who will fund remediation in the future? PI Insurers? The profit margins of AFSL’s that have no product? a Compensation scheme of last resort? All of these are fraught with issues.
In the past i’d recommend family see a bank aligned planner, because at least if there was a stuff up or worse a fraud, then my family member had the protection of the Big Bank who was ultimately responsible.
Financial risk of poor advice has been shifted from the banks to the consumer, because an adviser who does the wrong thing is unlikely to have the resources to make good.
It’s the way I felt a few years back and now I’m in a position where I can recommend absolutely any product without any licensee interference in the least (unless I recommend something expensive with no reason attached).
It’s honestly the right way to go.
A job back in the day would push me to use MLC Insurance as the only insurer. With the absolutely pigs breakfast that they have put on this year I couldn’t imagine being in a position “encouraged” (see: forced) to use them.
Same goes for platform, different balances and circumstances need different things. It certainly feels wrong to be recommending the same 1-2 things all the time.
I find it interesting all of these groups have suddenly started spruiking the need to not be vertically aligned…and whilst it’s a valid message, I wonder how many would be doing this if the restructures and sell offs didn’t happen, forcing them out of ‘alignment’? Better late than never I guess.
I think Mr Rowe has some valid points about the end of vertical integration from a boutique adviser perspective but I hope those practices joining Count Plus are conducting their own due diligence and making sure they are not going to be the next thing to blow up if ASIC comes knocking. I would want to be confident that Count Plus has adequately managed the fee for no service issue as well as making sure they don’t have members setting up SMSF’s so the accounting side of the business benefits (not the poor client) and that any product recommendations are all about what is best for the client and not what is easy for the adviser. This probably goes for any dealer group they want to join. Vertical integration was not the sole issue that has blown up.